Antitrust Law Daily Wrap Up, ANTITRUST—D. Md.: $163 million titanium dioxide price fixing settlement preliminarily approved, (Sep 13, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in Baltimore has granted preliminary approval to a $163.5 million settlement of claims by purchasers of titanium dioxide that market leaders in the production of that chemical had conspired to fix its price (In re Titanium Dioxide Antitrust Litigation, September 11, 2013, Bennett, R.). The court also approved the parties’ proposed notice, settlement administrator, and schedule for the final fairness hearing.

On February 9, 2010, purchasers of titanium dioxide, including class representatives Haley Paint Company and Isaac Industries, Inc., filed suit, asserting that Huntsman International, LLC, E.I. DuPont de Nemours and Co., Kronos Worldwide, Inc., and Cristal USA, Inc., formerly known as Millennium Inorganic Chemicals, Inc., conspired to fix prices for the chemical from February 1, 2003 to the present. Titanium dioxide is a chemical powder used to provide whiteness, brightness, and opacity to a variety of products, particularly paints and coatings.

On August 14, 2013, the court denied motions for summary judgment filed by Millennium and Kronos (2013-2 Trade Cases ¶78,488), and on August 26, 2013, the court amended the class definition to exclude purchasers whose titanium dioxide contracts contained: (i) an arbitration clause, (ii) a clause restricting the litigation of disputes to courts other than the forum, (iii) a class action waiver clause, or (iv) a provision waiving the right to a jury trial. In its present opinion, the court set forth its rationale for granting preliminary approval to class action settlements releasing all claims of class members in exchange for the defendants’ payment of $163.5 million into a common settlement fund.

Preliminary approval of settlement. The court found that the settlement agreements satisfied the applicable standard at the preliminary approval stage. The court explained that a preliminary fairness review considers two elements: (1) the fairness of the settlement and (2) the adequacy of the settlement.

Here, the settlements met the fairness prong, according to the court. The settlements were the result of three years of “good faith, arm’s length bargaining,” accompanied by “exhaustive, voluminous discovery,” and were not “reached until the very eve of trial.” The case was litigated “by experienced, highly qualified counsel on both sides,” with “no suspicion of collusion.”

The court also found that the settlements satisfied the adequacy prong. Although the plaintiffs “presented significant evidence of parallel conduct, as well as ‘plus factors’ that tended to exclude the inference that the defendants were acting in a pro-competitive manner,” their “case was based entirely on circumstantial evidence.” The uncertainty involved in proceeding to trial on that evidence, combined with the cost of a month-long trial and the “significant dollar value” of the settlements “strongly militate[d] in favor” of finding the settlement adequate. Moreover, the court noted that all defendants had agreed to settle with the class as defined in 2012, even though Cristal and Kronos had successfully reduced the number of class members from 537 to approximately 217 on the basis of various contractual provisions.

Notice. The court approved the proposed notice to be issued to class members. The parties had submitted a “detailed” notice to be mailed to the class members that set forth the required information “in a clear manner.” The summary notice to be published on the internet and in national periodicals was also “detailed and clear.” In addition, the proposed Proof of Claim form “outline[d] a practicable procedure for class members to demonstrate their entitlement to a pro rata share of the settlement fund.”

The court also approved the appointment of Gilardi & Company, LLC as the settlement administrator, and the parties’ proposed schedule for the final fairness hearing. Under that schedule, the hearing will occur on November 25, 2013 at 10 a.m.

The case is Civil Action No. RDB-10-0318.

Attorneys: Michael C. Dell Angelo (Berger and Montague PC) for Haley Paint Co. Darin P. McAtee (Cravath Swaine and Moore LLP) for E.I. DuPont de Nemours and Co. David B. Hamilton (Womble Carlyle Sandridge and Rice PLLC) for Huntsman International LLC. James P. Ulwick (Kramon and Graham PA) and Paul Edward Coggins (Locke Lord Bissell and Liddell LLP) for Kronos Worldwide Inc.

Companies: Haley Paint Co.; Isaac Industries, Inc.; East Coast Colorants; Huntsman International, LLC; E.I. DuPont de Nemours and Co.; Kronos Worldwide, Inc.; Cristal USA, Inc.

Cases: Antitrust MarylandNews